The British pound has succumbed to profit taking in today’s trading after rising nearly rising nearly 4c against its US counterpart over the past week and some predict that with possible rate hikes on the way there is room for more gains.

Inflation in the UK now sits at 2.9 percent and is well above the BOE’s target rate and it looks like they may have no choice but to lift interest rates before the end of the year.

"If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in bank rate might be as early as in the coming months." Said BoE policymaker Gertjan Vlieghe.

BOE Governor Mark Carney is is in Washington today and is due to give a speech on monetary policy at 16.00pm (GMT). Investors will focus on the governor’s words for any signs of future rate hikes which follows on from comments he made last week

If Carney fails to touch on the question of interest rates the pound may see a further pullback,

“Following the impressive sterling rally, any dovish comment by Carney is likely to weaken sterling more than hawkish comments would be able to support it at these current levels,” Commerzbank AG analyst Ulrich Leuchtmann wrote.